The Florida Division of Garner Furniture reported the following results for 2017: $$\begin{array} { l r }
\text { Invested capital } & \$ 800,000 \
\text { Profit margin } & 5 \% \
\text { Return on investment } & 8 \%
\end{array}$$ Given this information, how much was sales?

Question

The Florida Division of Garner Furniture reported the following results for 2017: $$\begin{array} { l r } 
\text { Invested capital } & \$ 800,000 \
\text { Profit margin } & 5 \% \
\text { Return on investment } & 8 \%
\end{array}$$ Given this information, how much was sales?

Quizplus · Accepted Answer

The return on investment (ROI) is calculated as (Profit / Invested Capital). Given ROI is 8%, and Invested Capital is $800,000, the Profit is $64,000. With a profit margin of 5%, Sales = Profit / Profit Margin = $64,000 / 0.05 = $1,280,000.